Interactive Brokers Order Rejection Message?

[Con1991]

I posted yesterday about the frustrating process of attempting to execute vertical credit spread options on the Interactive Brokers platform. This is a paper account. I am trying to open a credit spread, 50 contracts, with a 100-wide strike difference. I have set the limit price to 102, which is more than the distance between strikes (Works fine on TD paper platform), and I am receiving this order rejection message. It should not cost anything apart from commissions to execute this trade, so I cannot understand why it will not allow this trade to go through. There is 100k of equity in this paper account.

I have attached a screenshot for point of reference. Does anyone have a solution to this?

 

[Overnight]

I posted yesterday about the frustrating process of attempting to execute vertical credit spread options on the Interactive Brokers platform. This is a paper account. I am trying to open a credit spread, 50 contracts, with a 100-wide strike difference. I have set the limit price to 102, which is more than the distance between strikes (Works fine on TD paper platform), and I am receiving this order rejection message. It should not cost anything apart from commissions to execute this trade, so I cannot understand why it will not allow this trade to go through. There is 100k of equity in this paper account.

I have attached a screenshot for point of reference. Does anyone have a solution to this?

It clearly says you need 500K of equity in the account, and you have only 100K?

 

[Con1991]

It clearly says you need 500K of equity in the account, and you have only 100K?

That is the whole point. Why would one need 500k in margin for 50 contracts of a 100-distance spread? Credit spread margin requirement is distance in strikes minus credit received. That is the way it works with most other option brokers I know of.

 

[Overnight]

That is the whole point. Why would one need 500k in margin for 50 contracts of a 100-distance spread? Credit spread margin requirement is distance in strikes minus credit received. That is the way it works with most other option brokers I know of.

IB is known to have over-sized initial margin requirements for futures, WAY above exchange minimums, so it seems they have it for options as well. It is their prerogative.

 

[Con1991]

IB is known to have over-sized initial margin requirements for futures, WAY above exchange minimums, so it seems they have it for options as well. It is their prerogative.

Yes it seems so, despite their insistence to the contrary. Quite ridiculous really, when the same trades on TOS can be executed for far less.

 

[getthatintoya]

I posted yesterday about the frustrating process of attempting to execute vertical credit spread options on the Interactive Brokers platform. This is a paper account. I am trying to open a credit spread, 50 contracts, with a 100-wide strike difference. I have set the limit price to 102, which is more than the distance between strikes (Works fine on TD paper platform), and I am receiving this order rejection message. It should not cost anything apart from commissions to execute this trade, so I cannot understand why it will not allow this trade to go through. There is 100k of equity in this paper account.

I have attached a screenshot for point of reference. Does anyone have a solution to this?

You are selling a 700 point in the money bear call spread with 1 day to expiry. Unless a nuke goes off in times square before expiry 500k is what you will lose on the position at expiry.
Try the same spread for say June it should be less than 500k margin.

 

[Con1991]

You are selling a 700 point in the money bear call spread with 1 day to expiry. Unless a nuke goes off in times square before expiry 500k is what you will lose on the position at expiry.
Try the same spread for say June it should be less than 500k margin.

Funny that. The margin requirement is difference between strikes and max loss. I'll make it simple and attach a screenshot of same trade, only Apr 14th expiry this time, from my Thinkorswim paper account for reference. And see the difference. IB is screwing people on margins.

 

[getthatintoya]

Try using only 10 contracts with both brokers and see what you get

 

[Con1991]

Try using only 10 contracts with both brokers and see what you get

Same result, only five times less. IB requiring 100k margin for 10 contracts, whereas TD requires only max loss as margin, in this case 0.

 

[getthatintoya]

It is synthetically the same using puts. Try that on both brokers and see what you get.